Being the largest cryptocurrency exchange in the world, Binance has faced a great deal of pressure to list its stock on a public exchange. The company’s biggest rival, Coinbase, made the same move earlier this year in what captivated both the crypto and traditional stock markets. So, Binance has also been pressured to do the same.
However, circumstances beyond the company’s control have meant that a public debut hasn’t happened just yet.
Learning From a Rival
There is no doubt that Binance has a strong business and an interesting spot in the crypto market. The company processes billions in trading volumes daily, and its daily transaction volumes are also something to be impressed with. However, the company’s ability to go public has been hampered by several things.
Perhaps the first is the fact that Binance itself isn’t so pumped about going public. Earlier in September, Binance chief executive Changpeng “CZ” Zhao explained that the company was targeting an initial public offering IPO) for its American subsidiary - BinanceUS. But that in itself wouldn’t come until 2024 at the earliest.
As CZ said, BinanceUS will be looking to close a large private funding round in the next two months to help it become more independent from the Binance parent organization. Once regulatory hurdles have been cleared, a public offering could come in the next three years.
Zhao added that Binance was able to generate between $800 million and $1 billion in profits last year, adding that BinanceUS would eventually “do what Coinbase did.” A public listing for Binance will be a big deal for sure, ensuring that the world’s largest exchange gets the leverage it needs to grow even bigger. But, the company isn’t rushing towards anything.
Binance appears to be taking a lesson from Coinbase. While Coinbase’s public debut was a huge announcement across the board, the eventual debut wasn’t so impressive. For one, Coinbase had its IPO around the time when crypto prices began to plunge earlier this year. There is also the fact that cryptocurrencies aren’t fully regulated yet.
When Coinbase eventually debuted, the reaction from the market was mixed. A day after the debut, the company’s stock had started trading down. Binance will be looking to avoid this by picking a time when the market is solid and hoping that the regulation of cryptocurrencies in the country becomes better in the future when it plans to list.
Regulatory Problems Just Won't Budge
Then, there is the issue of Binance’s problems with regulators seemingly all across the world. As the world’s largest crypto exchange, it is only expected that Binance will be a major target for countries that have anti-crypto agendas. However, the level of conflict that the company has had with regulators over the past few months has been quite alarming.
This month alone, Binance has said that it would cease options and futures trading in Australia. In an official announcement, the company claimed that its Australian users would have 90 days to reduce and entirely shut down their positions for products like options, futures, and leveraged tokens.
Australian Binance users would also no longer be able to increase or open new positions for derivatives products on the exchange. However, they will still be able to top their margin balances in order to prevent margin calls and liquidations. A company spokesperson said:
“We are committed to our industry for the long term and we want to ensure our product offerings are welcomed by users and local regulators. We also monitor local regulatory requirements across different markets as Binance operates globally. We want to ensure the process for any transition we make is not disruptive.”
Another limit came earlier in September when Binance pulled back support for the Singapore dollar. As the company announced at the time, customers would no longer be able to make payments or trade cryptocurrencies denominated in the Singapore dollar. Binance’s mobile app is also set to be taken down from the Apple Store and Google Play Store in Singapore.
The decision came after the Monetary Authority of Singapore (MAS) warned that Binance might be in violation of its Payment Services Act. The MAS placed Binance on a warning list along with other companies and individuals who had allegedly been wrongly perceived to be operating with a license from it.
If Binance is to make any progress with an IPO in the future, the company will need to clear these regulatory hurdles once and for all.